Displaying items by tag: Nigeria
Nigeria: The Presidential Initiative for the North East (PINE) has concluded arrangements with LafargeHolcim, the owner of Ashaka Cement in Gombe State, that will see an investment of US$100m to create jobs and alleviate poverty caused by the activities of Boko Haram in the region.
The funding was announced by the Secretary of PINE, Mallam Umar Gulani, who was in Maiduguri, the Borno State capital, with his team to distribute relief materials to victims of insurgency in the state.
Nigeria: According to All Africa, Ashaka Cement has filed a suit against the Federal Inland Revenue Service (FIRS) before the Tax Appeal Tribunal, North West Zone over a US$6.94m tax dispute.
In its statement of claim, Ashaka Cement faulted the tax assessment made by the FIRS and urged the tribunal to review the decision. It alleged that, in December 2014, the FIRS commenced a tax audit exercise on Ashaka Cement with respect to the year 2013.
"Subsequent to the exercise, the respondent issued an invitation / demand notice dated 2 December 2014 on the appellant (Ashaka Cement), assessing unpaid tax liabilities, which the appellant representatives attended on 15 December 2014. The invitation / demand notice contained the breakdown of the assessment made by the Respondent (FIRS). The Appellant received the said letter on the 4 December 2014. The Appellant responded to the said notice by an objection letter dated 22 December 2014 and served on the Respondent on 29 December 2014," said Ashaka Cement.
According to Ashaka Cement, the service of the objection letter was preceded by a reconciliation meeting held between its representatives and the FIRS' representatives on 15 December 2014. It said that vital issues contained in the FIRS' notice were discussed and 'ironed out.' Ashaka Cement argued that the grounds of objection raised in its notice was a reflection of issues raised, canvassed and agreed upon at the reconciliation meeting. It noted that it had assessed its tax liability on technical fees based on estimate only and all supporting documents were attached in form of Appendixes 1-12.
Nigeria: Following criticisms by foreign media, which has called for a massive devaluation of the Nigerian Naira instead of foreign exchange restrictions on certain items by the Central Bank of Nigeria (CBN), Alhaji Aliko Dangote, owner of Dangote Cement, has voiced his strong support of the CBN's decision, calling the ban on 41 items from the foreign exchange market as 'excellent and one of the best decisions taken so far by the CBN governor Godwin Emefiele.' Dangote described the CBN's intervention as appropriate for the Nigerian economy. "We cannot be importing poverty and exporting jobs," he said.
The CBN recently announced the restriction of importers of 41 items from the official foreign exchange market. Some of these items include cement, rice, wheel barrows, head pans, margarine, palm kernel/vegetable oil, meat and processed meat products, vegetable and processed vegetable products, poultry, private airplanes/jets, Indian incense, toothpicks and canned fish in sauce, among others.
Dangote believes that this should be seen as a call for all hands to help with the development of the nation's economy. He said that the measure would encourage Dangote Group, "To look inward and produce locally to create jobs for our growing young population." Dangote said without the ban by the administration of former president Olusegun Obasanjo, he wouldn't have got the opportunity to grow his cement business as it is today, such that he is now exporting cement when only 10 years ago Nigeria was importing cement massively. His cement companies have a combined capacity of 20Mt/yr, providing hundreds of thousands of direct and indirect jobs across Nigeria.
Nigeria: According to Business Day, Cement Company of Northern Nigeria (CCCN), plans to inject US$241m into the ongoing modernisation of its facilities to double its production capacity.
Managing director Alf Karlsen said that the project would raise the company's cement production capacity by 200% to 1.5Mt/yr. "The expansion is part of the ongoing modernisation and cost optimisation programme. It aims to reduce costs and enhance production capacity with a view to ensuring that CCNN remains competitive in the cement industry. The increase in installed capacity would enable the company to maintain its current market share and expand into new markets," said Karlsen. Karlsen also disclosed that CCCN has completed the acquisition of new mining areas to expand its quarry activities.
CCCN's expansion project has led to the relocation of the Sabon-Gida, Danatu and Gidan Mubaga villages, 'to a fully developed new settlement provided by the firm.' "CNN provided the land for resettlement, constructed access roads, provided electricity, mechanised borehole with reticulation, as well as a community mosque, clinic, primary and Islamiyya schools, among others. All this was done to ensure that there is an improved life for the communities as part of our corporate social responsibilities," said Karlsen.
The small cement industry of Mozambique, in south west Africa must be an interesting place to make cement. On one side the country's producers, like their more vocal South African counterparts, have been fighting off cheap imports from Iran, Pakistan, China et al. On the other side of the coin though, Mozambique has growing domestic demand and is within striking distance of growing markets further into Africa, like Malawi and the Democratic Republic of Congo (DRC).
With the announcement this week that there will be not one but two new integrated cement plants in the country, bringing over 2Mt/yr of new capacity, everything should be set fair for the coming years then, shouldn't it? Domestic production will rise, the price of local cement will fall as a result, competition from imports will drop off and money will be made from new exports.
Except that might not happen. Before the announcement of these two plants, (one of which does not state a capacity), there was around 5.5Mt/yr of grinding and integrated capacity either currently active in Mozambique or due to come onstream in 2015. With the new projects this rises to over 7.5Mt/yr.
The desirable chain of events described above starts to break down due to the fact that domestic demand in Mozambique, while rising, is not currently anywhere near as high as domestic supply. The United States Geological Survey estimated that the country produced just 1.2Mt/yr in 2012. Data for 2013 and 2014, though unavailable, is highly unlikely to show a three-fold increase. Indeed Insitec, a minority shareholder in Cimentos de Moçambique, predicted in 2014 that demand for that year would rise to just 1.5Mt, before hitting the dizzying heights of 1.8Mt in 2018 – And that's still three years away!
So what are the options? Option 1: Some or all of the planned and mooted cement plants will fail to come to fruition. Option 2: Some or all of the plants will be built but will operate at reduced capacity and/or on a campaign basis. Option 3: The Mozambican cement industry becomes a regional powerhouse and starts to export to its neighbours.
Option 1 is certainly possible. Limak Group, one of the parties linked to the new projects, is a Turkish cement producer that is inexperienced outside of Turkey. There has also been a lack of information on the progress of projects by Austral Cimentos ('coming on stream in 2015'), Star Cement and Consolidated Building Materials, although a lack of progress reports does not necessarily imply 'no progress.'
Option 2 is more likely, as some producers already operate on a campaign basis. InterCement's plant at Nacala, formerly an integrated plant, currently operates only as a grinding station. Option 3 is also possible, with Malawi particularly lacking in cement production facilities.
In reality a combination of all three 'Options' is the most likely outcome. However, this will lead to Mozambique becoming yet another player in an increasingly busy African cement market. The desire for self-sufficiency in cement production, a common goal for the region's governments, can easily lead to over-estimates of local demand growth, with resultant over-capacity. Of course the expectation that all African countries can get rid of this extra cement capacity via exports will ultimately backfire.
In southern Africa we already have South Africa exporting. Angola declared 'cement self-sufficiency' in October 2014 and banned imports at the start of 2015. Zambia, Botswana, Zimbabwe and DRC all have large-scale Dangote and/or PCC projects near completion or in production that will greatly reduce their need for imports. Meanwhile, further north, Nigeria is already a gigantic producer and significant cement exporter. Cameroon has recently banned imports and Ghana is thinking of doing the same. Over in the east of Africa, Ethiopia's (and the rest of that region's) rapidly-developing situation was covered in this column just two weeks ago.
Finally, in the north of Africa, Algeria has declared its intention to be self-sufficient in cement by 2016. This news must have 'gone down like a lead balloon' in Italy, Spain and Greece, which have been reliant on north African markets after the bottoms fell out of their own economies. In the north east, Egypt has different problems at present, also described previously. It needs fuel not cement!
So where does this all lead for regional cement dynamics in Africa? Well perhaps the situation in India points the way. There, as in Africa, local and regional producers with the desire to expand grew from their local bases and eventually overlapped. Against a backdrop of lower-than-expected demand, the country now has overcapacity. This has resulted in smaller producers being acquired and leaving the market.
Could this eventually happen in Africa? Only time will tell. However one thing is certain: It's just not possible for every country to export to every other country!
Nigeria: According to All Africa, Cement Company of Northern Nigeria (CCNN) in Sokoto will invest US$600m to expand its power plant from 12MW to 16MW.
The Bureau of Public Enterprise (BPE) Media head Alex Okoh said that CCNN principal manager of corporate affairs Alhaji Suleiman disclosed this while addressing BPE's post-privatisation monitoring team during a recent visit to the plant. Suleiman said that the expanded plant will be built in partnership with China's CBMI. "CCNN's plant does not generate sufficient power when the plant is run at full capacity utilisation," said Suleiman.
UniCem debunks report on planned relocation to Lagos
19 June 2015Nigeria: According to This Day Life, United Cement Company of Nigeria Limited (UniCem) has denied claims that it was making plans to relocate from Calabar, the Cross River State capital, to Lagos.
UniCem debunked the claims following a publication made by the Cross River State-owned Weekend Chronicle to the effect that the alleged planned relocation had caused internal crisis in the company. However, UniCem has reacted to the speculated relocation plan through a press statement and said that there was no truth in the report.
"United Cement Company of Nigeria Limited (UniCem) has declared as false a publication on the front page of the Weekend Chronicle of 19 June 2015 with the caption 'Crisis rocks UniCem over relocation plan,'" said the statement, which was signed by UniCem's corporate affairs director Ayi Ita Ayi. Ayi said that, "The report is false, misleading and lacking in truth." He added that UniCem operates in Calabar and will never be relocated to Lagos for any reason. He questioned why anyone would contemplate that UniCem, with such a huge investment in Cross River, would relocate its assets to Lagos and expressed surprise over why, a reputable media organisation such as the Nigerian Chronicle, did not cross-check facts before going to press on such a sensitive issue.
Nigeria: Lafarge's Ashaka Cement has reported that its first quarter 2015 profit fell despite reduced production costs. The fall was attributed to lengthy rainy rains and insurgency in the north of country that disrupted operations.
Ashaka Cement's operations have been disrupted by Boko Haram as the company is located in Gombe State, an insurgent hot-spot. Boko Haram has waged a six-year campaign to impose Islamic law, or Shariah, in Africa's largest economy and biggest oil-producer.
For the first three months that ended on 31 March 2015, Ashaka's net income fell by 53.5% year-on-year to US$4.47m and its sales dropped by 29.8% to US$22.9m. Gross profit was down by 48.9%, while gross profit margin fell to 35.7% in 2015 compared with 48.7% in the same period of 2014. Net margin, a measure of profitability and efficiency, fell to 19.5% compared to 29.5% in the first quarter of 2014.
While Ashaka Cement's profits flounder due to political risk, it was also able to reduce its costs. Cost of sales fell by 11.7% year-on-year to US$14.7m in the first quarter of 2015 as the company increased its use of local coal in place of expensive low pour fuel oil (LPFO).
Ashaka Cement is currently expanding its cement production capacity from 1Mt/yr to 4Mt/yr. The expansion will comprise debottlenecking of the existing line for additional 500,000t/yr and the installation of a new 2.5Mt/yr line, according to Suleiman Yahyah, chairman of the board of directors of the company. "As part of the expansion project, a captive coal-fired 64MW capacity power plant will be built in order to allow a reliable and sufficient source of power for the existing plant and the new cement line," said Yahyah.
House of Representatives try to avert clash between Edo and Kogi over limestone deposit
03 June 2015Nigeria: On 2 June 2015 the House of Representatives intervened in a dispute between Ohinoyi of Ebiraland, Alhaji Ado Ibrahim and Company (AICO) in Kogi State and Okpella in Edo State over the ownership of a limestone deposit. The motion on the issue, which came as a matter of Urgent National Importance, moved by Edo lawmaker Abubakar Momoh, was unanimously adopted by the House.
"This peaceful co-existence is being threatened by the purported sale of OBU Limestone in Okpella, owned by Okpella Cement, to Dangote Company by Alhaji Ado Ibrahim. This is with a view to frustrating BUA Cement Company, which acquired Okpella Cement as a private investor," said Momoh.
According to Momoh, BUA has also built a cement plant in Okpella, which is due for inauguration in June 2015. "The House recalls that when in 1994, this same ownership of OBU Limestone deposit arose, the Okpella community went to court on the issue. The suit was filed against AICO, which prompted AICO to file application in 1997 to the Okpella community for local consent. The consent was turned down on account of having already granted the same to Edo Cement, which owned the mining license of the deposit," said Momoh.
According to Momoh, if nothing was done immediately to settle the matter, it might lead to a clash between the parties. He urged the security agencies to make adequate security arrangements in the location. "The governments of Edo and Kogi should intervene and settle the matter amicably, before it degenerates into serious inter-communal clash between the two states. The National Boundary Commission is urged to intervene with a view to permanently establishing the boundary between Edo and Kogi."
The acting speaker, Emeka Ihedioha, who presided over the plenary session, advised the two communities to maintain peace and assured them that the house would do its best to resolve the issue.
UniCem to suffer US$45.2m losses in 2015
20 May 2015Nigeria: The management of United Cement Company of Nigeria (UniCem) has disclosed that the company will suffer losses totalling US$45.2m in 2015 due to the economic downturn currently affecting Nigeria, including devaluation of the Naira.
"The devaluation of the Naira impacts negatively on our business because most of our transactions, like procurement of spares and materials, payment of some of contractors (Macmahon and CBMI), energy cost and servicing of foreign creditors, are basically US$-denominated. Cumulatively, we will have a revenue loss of US$45.2m in 2015 due the devaluation of the Naira," said managing director Olivier Lenoir.
The construction of the line II project at Mfamosing, Akamkpa in Cross River State is on course and will provide employment for hundreds of workers. "This project will at peak employ a total manpower of 1915. At this moment the manpower working in the project is 1290. The operations will determine what the manpower need will be when we handover the project," said Lenoir. "The captive power plant is 85% complete and the civil construction of the second line is at 38%." He added that the major challenges in the project are non-technical and include high level of malaria infection, heavy rainfall and customs clearance problems. Lenoir said that, despite these hitches, UniCem is optimistic that the project will be completed on schedule by September 2016.